Starting a Business How much is needed to start? Where will the financing come from? How long till we make a profit? What will sell the best? Where? What will be the biggest expense? When do they need to be paid?
Reasons for Business Failures 1. You start your business for the wrong reasons. 2. Poor Management 3. Insufficient Capital 4. Location, Location, Location 5. Lack of Planning 6. Overexpansion 7. No Website
Insufficient operating funds Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming revenues from sales. It is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. It is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs.
Revenue All the income that a business receives over a period of time.
Business Expansion Adding on to existing. Will it make more than it will cost?
Budgets Provides detailed plans for the financial needs of the individuals, families, and businesses.
Business Budgets Two main purposes 1. Anticipate sources and amounts of income. 2. Predict the types of amounts of expenses for a specific business activity or the entire business.
Places to get info (new) Small Business Administration (SBA) Dun and Bradstreet Value Line Fortune Forbes The Wall Street Journal National Federation of Independent Business National Retail Merchants Association Financial Institutions
Four Steps in Budgeting 1. Prepare a list of each type of income and expenses. 2. Gather accurate information (sources) for each type of income and expense. 3. Create the budget (calculating income, expense, and net income/loss). 4. Explain the budget to people.
Types of Budgets Start-up Budget Plans income and expenses from the start Is used until the business becomes profitable Operating Budget Ongoing operations Specific period Cash Budget Estimate of actual money paid out Specific period